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Trading Strategies: Power Move and Crawler Move
Jun 27, 2024
Trading Strategies: Power Move and Crawler Move
Overview
Main Question
: Will the price reverse higher from support or break down?
Understand the types of moves that happen when the price approaches support or resistance:
Power Move
and
Crawler Move
.
Power Move
What is a Power Move?
Power Move into Support
: Series of big bearish red candles approaching support.
Power Move into Resistance
: Series of big green candles approaching resistance.
Significance of Power Moves
Fear of Giving Back Profits
: Traders short at resistance might take profits to avoid losses, inducing buying pressure.
Technical Analysis
: Traders see the obvious support area and buy, creating buying pressure.
Reversal Potential
: Reversal can be swift because the next obstacle (resistance) is far away, leading to a larger potential profit area.
Example of Power Move
Bearish candles into support
: Indicates possible reversal due to buying pressure and lack of obstacles.
Caution
: Not all power moves lead to reversal.
Crawler Move
What is a Crawler Move?
Into Support
: Series of lower highs approaching support (sign of market weakness; sellers are in control).
Into Resistance
: Series of higher lows approaching resistance (sign of market strength; buyers are in control).
Significance of Crawler Moves
Lower Highs into Support
: Indicates selling pressure and higher likelihood of support breaking.
Higher Lows into Resistance
: Indicates buying pressure and higher likelihood of resistance breaking.
Example of Crawler Move
Lower Highs into Support
: Sign of weakness, likely leading to a breakdown.
Higher Lows into Resistance
: Sign of strength, likely leading to a breakout.
Trading Strategies
Using Power and Crawler Moves
Power Move into Support/Resistance
: Look for additional signs before trading the reversal.
Crawler Move into Support/Resistance
: Likely to break following the trend seen (breakdowns for support, breakouts for resistance).
Support and Resistance Trading Strategy
Identify Market Structure
: Downtrend in New Zealand/Canadian pair on 4-hour timeframe.
Area of Value
: Resistance area to look for trades.
Entry Trigger
: Valid entry trigger such as bearish engulfing pattern.
ATR Stop Loss
: Set stop loss using ATR (Average True Range) to avoid premature stop-outs.
Targets
: Dual targets - Conservative and further target using Fibonacci extension for potential profits.
Example Recap
Trade Management
Entry
: When market shows valid entry trigger (e.g., bearish engulfing pattern), enter on next candle open.
Stop Loss
: Use ATR indicator to set logical stop loss levels.
Targets
: Use swing lows and Fibonacci extensions to set multiple targets for profit-taking.
Handling Trades
: Do not shift stop losses to break even prematurely.
Analysis of Market Patterns
Crawler Move into Resistance
: Signals potential breakout; set logical stop loss and profit levels.
Alternative Opportunity
: Power move into support may offer buying opportunities.
Risk Management
Stop Loss Management
: Utilize logical levels and ATR values to avoid premature stop-outs.
Profit Management
: Use multiple targets and Fibonacci tools to maximize potential gains.
Bonus: Price Action Trading Secrets Book
Contains strategies and methodologies for identifying trading opportunities using support, resistance, and other price action techniques.
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